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US stocks experienced significant losses on Wednesday as investors digested comments from Federal Reserve Chair Jerome Powell, who issued a stark warning about the potential economic impacts of President Donald Trump’s tariffs. The Dow Jones Industrial Average dropped 700 points, or 1.73%, while the broader S&P 500 fell by 2.
24%. The technology-heavy Nasdaq Composite saw a sharp decline, tumbling 3.07%.
Speaking at an event in Chicago, Powell stated, “The level of the tariff increases announced so far is significantly larger than anticipated. The same is likely to be true of the economic effects, which will include higher inflation and slower growth.” His remarks reflect growing concerns about the unknown long-term consequences of Trump’s trade policies, which have sparked volatility across the markets.
US Stocks Struggle With Uncertainty Over Trade Policy Wall Street has been mired in uncertainty for several months, with investors grappling with the Trump administration’s fluctuating stance on trade. Powell’s warning is the latest in a series of signals from economic experts and businesses alike, who are bracing for the potential fallout from the tariffs. Recent data from the Commerce Department indicated that US retail spending surged in March, as Americans rushed to make purchases ahead of impending tariff hikes.
The spike in consumer spending marked the strongest monthly growth in over two years. The uncertainty surrounding the tariffs has been compounded by the ongoing trade war between the US and China. In one high-profile case, semiconductor giant Nvidia (NVDA) saw its stock plummet 6.
87% on Wednesday after the company revealed that new restrictions from the US government would result in a $5.5 billion loss. These restrictions, which affect Nvidia’s artificial intelligence chips, are part of the broader US-China rivalry for dominance in AI, a competition that has escalated since January when China’s DeepSeek made waves with a lower-cost AI model that is seen as a serious challenger to US tech.
Unpredictable Tariffs Add to US Stocks Volatility Investors are also on edge as they await further developments in the Trump administration’s trade policies. The White House’s back-and-forth on tariffs has kept the markets volatile. On Monday, the administration launched investigations into imports of pharmaceuticals and semiconductor chips, which could lead to further tariff measures.
Trump also signaled that he would announce a new tariff rate on imported semiconductors in the coming week, though he indicated that some companies in the sector may receive exemptions. The S&P 500 had briefly rallied on Monday, following the announcement of exemptions on electronics imported from China and the possibility of tariff reprieves for automakers. However, the index dipped again on Tuesday and Wednesday, remaining below its closing price on April 2—just before Trump unveiled his initial “reciprocal” tariff strategy.
In a note to investors, analysts at Citi highlighted the ongoing unpredictability, stating, “In the interim, if the recent flip-flopping around US tariffs and their implementation (as with last Friday’s reprieve for tariffs on tech) is anything to go by, the only certainty is that market participants will be forced to endure a period of extended market uncertainty.” Global Economic Growth Weighed Down by Trade Tensions The global economic outlook has also taken a hit due to the US-China trade war. According to a new report from the World Trade Organization (WTO), the global GDP is expected to grow by just 2.
2% this year, 0.6 percentage points lower than projected in a scenario without the imposition of additional tariffs. The WTO’s revised forecast underscores the broader economic strain being felt as nations navigate the complexities of the trade conflict.
Amid the market turmoil, gold prices surged more than 3% on Wednesday, reaching a record high above $3,300 per troy ounce. As a traditional safe haven asset, gold has benefited from increasing demand amid the uncertainty surrounding the global economy and the US-China trade dispute. Goldman Sachs analysts raised their year-end price forecast for gold to $3,700, anticipating that the demand for the precious metal will continue to grow as tensions between the two economic giants escalate.
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